b) Another issue is the Master-Liquid Enhancement Conduit (M-LEC), that may be set up by several banks, including Citi, to create a pool to back up to $100 billion in mortgage securities. There seems to be some disappointment that the market is not greeting this news as a positive for financials; those who bought on or ahead of the news are now selling financials.

c) The most important issue is we are now at "put up or shut up" time. Having watched a lot of retailers, oil companies, and financials talk down Q3 earnings, traders have bought under the theory that Q4 will be better...and now they have to deliver. Beware companies like Eaton who lower Q4 earnings and try to blame the housing problems...Eaton down 3%.

Remember what happened Thursday, when the S&P 500 moved in a nearly 30 point range and ended near the lows of the day? Traders view that as a "wake-up call" regarding volatility on earnings season; today has a similar smell.

Citi on buybacks: Despite beating earnings, Citi has been weak on anxiety over deteriorating consumer credit and the announcement that they were halting buybacks until things improve. However, Citi appears to have halted their buyback program some time ago. According to TrimTabs.com, there was no comment in the 8K about buybacks in the third quarter; one assumes they said nothing because they made no buybacks.

In Q2 they had only bought a token amount, $8 million worth, the last significant quarter of buybacks was Q1, when they bought back $645 million. By comparison, Citi bought back $7 billion in 2006. The last time a buyback was announced was on April 16, 2006, when Citi said it would buy back up to $10 billion worth of stock.